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Sodexo SW

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Stock XPAR Rating as of
€79.50 −0.75 (0.93%)
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Company Report

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Sodexo: Share Price Reaction to Third-Quarter Revenue Overblown

Michael Field

July 2's share price fall highlights the investor disappointment at Sodexo’s fiscal third-quarter update, but we think the reaction is overblown. The company delivered organic revenue growth of almost 7% over the period, right in the middle of its full-year guidance range. Furthermore, the company confirmed that revenue growth for the full year would be at the top of the range. This is nothing to be sniffed at. We reiterate our EUR 92 fair value estimate for narrow-moat Sodexo and see decent upside from the prevailing share price.

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Price vs Fair Value

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SW is trading at a 250% premium.
Price
€80.25
Fair Value
€97.00
Uncertainty
Medium
1-Star Price
€348.70
5-Star Price
€55.70
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Sodexo estimates that the entire market for outsourced food services is only about 50% penetrated, which leaves ample room for the company to increase market share.

Bears

Cuts to investment in the commodity sector could pressure Sodexo’s remote site business.

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Trading Information

Previous Close Price
€80.25
Day Range
€79.40–80.40
52-Week Range
€68.67–89.40
Bid/Ask
€79.45 / €79.55
Market Cap
€11.64 Bil
Volume/Avg
27,796 / 204,615

Key Statistics

Price/Earnings (Normalized)
16.69
Price/Sales
0.52
Dividend Yield (Trailing)
3.86%
Dividend Yield (Forward)
3.86%
Total Yield
4.04%

Company Profile

Sodexo is one of the largest food service companies globally, operating in more than 80 countries with annual sales of more than EUR 20 billion. Sodexo's model stems from operating on-premises catering facilities, rather than centralized industrial kitchens. While food services remains the largest business segment (58% of revenue in 2022), the company has actively pursued a strategy of diversifying its business activities into other areas, such as facilities-management services, which now represents more than a third of group revenue.
Sector
Industrials
Industry
Specialty Business Services
Stock Style Box
Mid Core
Total Number of Employees
430,000
Website
http://www.sodexo.com

Competitors

Valuation

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Metric
SW
CPG
Price/Earnings (Normalized)
 16.6930.84
Price/Book Value
 2.677.14
Price/Sales
 0.521.16
Price/Cash Flow
 12.1016.47
Price/Earnings
SW
CPG

Financial Strength

Metric
SW
CPG
Quick Ratio
 1.110.66
Current Ratio
 1.220.78
Interest Coverage
 5.659.87
Quick Ratio
SW
CPG

Profitability

Metric
SW
CPG
Return on Assets (Normalized)
 5.08%8.97%
Return on Equity (Normalized)
 22.19%30.10%
Return on Invested Capital (Normalized)
 9.76%17.59%
Return on Assets
SW
CPG
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